Cannon-Brookes and Forrest are at odds over Australia’s energy future

How many billionaires does it take to change a lightbulb? none. Billionaires don’t change lightbulbs, so the joke goes. But they can invest billions to reshape the energy market like Andrew Forrest and Mike Cannon-Brookes, Australia’s second and third richest businessmen, are doing.

Forrest and Cannon-Brookes have each been on their own crusade to address climate change by forcing Australia and the world to adopt green energy faster, away from fossil fuels. The two multi-billionaires even co-invested in solar energy company Sun Cable, a $35 billion moonshot project that would deliver power from the Northern Territory to Singapore via the world’s longest undersea high-voltage cable that would traverse an archipelago noted for its volcanic activity is known.

Since the collapse of Sun Cable earlier this month, Forrest and Cannon-Brookes, once kindred spirits in their effort to make climate change a national concern, have been at odds. They are all vying to buy Sun Cable out of voluntary management, and the battle is theatrical. Each side has leaked against the other, passions are running high, massive egos are at stake and big checkbooks are at the ready.

As private companies Forrest and Cannon-Brookes challenge, the question becomes: why aren’t any of the billionaires using the project to solve Australia’s big energy problem?

Sun Cable has focused on exporting power to Singapore — a tiny city-state with a fifth of Australia’s population — rather than Australia’s east coast, which will face medium-term power shortages to meet demand from accelerated coal-fired power plant closures.

Last year, Cannon-Brookes’ investment arm Grok Ventures and Canada’s Brookfield Asset Management launched a failed takeover bid for the country’s largest power producer, AGL, with Cannon-Brookes publicly urging the early closure of the group’s coal-fired power plants curb Australia’s carbon emissions. AGL, the country’s biggest polluter and responsible for about 8 per cent of Australia’s total carbon emissions, owns the Bayswater coal-fired power stations in NSW’s Hunter Valley and Loy Yang in Victoria’s Latrobe Valley.

After the failed bid, Grok used his 11 percent held to campaign against a dramatic corporate restructuring that would have split the company into two companies, coal-focused Accel Energy and retailer AGL Australia. Grok also nominated four directors for appointment to the board, which were ultimately supported by a majority of AGL shareholders. AGL’s new CEO, Damien Nicks, vowed last week to come up with firm plans to underpin the accelerated closure of its coal plants and investments in renewable energy.

While shutting down coal-fired power plants across the country will help reduce greenhouse gases and support the federal government’s goal by 2030 to reduce emissions by 43 percent from 2005 levels, a significant risk remains. Shutting down coal-fired generators too early without enough reliable power to back up wind and solar power — and adequate battery storage — could lead to a chaotic energy transition, putting power supplies and prices at risk.

For now, coal remains the dominant fuel source powering Australia’s national energy market. In figures released last week, Australia’s energy market operator showed that coal still accounted for just over half of the fuel fed into the national energy market in the last quarter of 2022.

There are many proposed renewable energy projects in Australia that may or may not go through. And even if they did, experts argue, replacing power from coal-fired power plants, most of which are due to be shut down by 2036, still won’t be enough.

As a co-investor in Sun Cable, Cannon-Brookes’ Grok could have the solution to the problem of bringing more renewable energy to the Australian market. Instead, he continues to believe in the vision that the project he chaired should export energy to Singapore. Grok has argued that enough renewable capacity is already being developed to meet service customer demand in Australia.

Sun Cable, a project deemed investment-ready by Infrastructure Australia, aimed to provide 15 percent of Singapore’s electricity from a 12,000-hectare solar farm with a capacity of up to 20 gigawatts located 5,000 kilometers away near Tennant Creek in the Northern Territory. Some of the electricity generated by this farm would also have been supplied to Darwin.

A Grok spokesman said the project was about “maximizing results for the Northern Territory, the Australian economy, shareholders and the global effort to reduce emissions”.

The Singapore project was the reason the founders started the company and the reason investors invested in the company in the first place.

Grok and all other investors, with the exception of Squadron, strongly believe that Australia-Asia PowerLink, the cable to Singapore, is the project to support – it continues to meet key milestones and stays on track to deliver affordable cleanliness to deliver energy to singapore. This flagship project is likely to deliver significant results for the company, attracting further investor capital and creating a new industry in Australia.

Currently, most of Singapore’s electricity is provided by gas and as a result, per capita CO2 emissions are high – almost as high as in countries with significantly larger populations such as Malaysia and Japan.

For that reason, it’s understandable why it would be an attractive target market for renewable energy. But five years after its inception, Sun Cable still hadn’t signed any deals with Singaporean customers. Rather, after much rhetoric and optimism, the company had declarations of intent. The project should not start construction before 2024.

According to Grok Ventures, Sun Cable had received letters of intent from prospective Singapore customers in October last year who wanted to purchase 2.5 gigawatts of electricity, versus a planned supply of 1.75 gigawatts.

Singapore last year began importing up to 100 megawatts of hydroelectric power from Laos, using existing infrastructure via Thailand and Malaysia.

Forrest’s Squadron Energy has argued that the company is not commercially viable in Singapore. It would prefer the project to be domestically focused, with a potential cable link from the solar farm to Darwin, with the energy potentially being used to power a possible green hydrogen project that would most likely be for export.

However, one idea being debated by some in the energy industry is the possibility of running a cable, also known as an interconnect, from Sun Cable’s proposed solar farm in the Northern Territory – the world’s largest solar farm and battery storage facility – to Queensland, where there is an existing infrastructure operating in could feed into the national energy market. It would be significantly less complex and cheaper than the original $35 billion outlay to reach Singapore.

Forrest has a number of investments in Central Queensland through Squadron Energy and also Forrest Future Industries. In Gladstone, FFI is developing a green energy manufacturing center to build an electrolyzer plant needed to produce green hydrogen. According to Fortescue, the plant will make its first electrolyser this year despite the withdrawal of its joint venture partner, Plug Power, from the project. Electrolysers from this facility are to be used in FFI’s planned green hydrogen facility on Gibson Island near Brisbane.

Meanwhile, Squadron Energy is developing the $3 billion Clarke Creek wind, solar and battery project in central Queensland.

Pierluigi Mancarella, professor of electrical power systems at the University of Melbourne Energy Institute, says laying a cable from the Northern Territory to Queensland is “feasible”. “Once we have very large-scale production of solar power backed by batteries, could we use it locally, with interconnections to the east coast? That is definitely possible.”

However, other experts such as Georgios Konstantinou, lecturer in energy systems at UNSW, say there are already an enormous number of proposed renewable projects, particularly in Queensland and NSW, that are closer to existing transmission systems. For this reason, it would be economically questionable to run a cable from the Northern Territory to Queensland.

Konstantinou was also skeptical of Sun Cable’s plans to deliver power to Singapore, estimating that the cable length could lose up to 20 percent of its power by the time it arrives at its destination.

Tony Wood, the Grattan Institute’s energy director, was also skeptical of Sun Cable’s Singapore export plan, saying building a cable from the Northern Territory to Queensland is unlikely to work unless Squadron Energy acquires it very cheaply.

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“If he [Forrest] could buy it cheap enough and complete it at a lower cost, at a cost point that would be cheaper than building a new plant of the same size in west or central Queensland to power the electrolyser plant he is talking about and export hydrogen Gladstone, that would be interesting. But it’s about whether he could buy it at a low enough price,” says Wood. Forrest and Cannon-Brookes declined to comment.

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